With zero capital structure rebalancing costs, dynamic tradeoff theory predicts that firms stay at their leverage targets with more profitable firms staying at higher leverage. This prediction is rejected by the robustly negative correlation between leverage and profitability. When rebalancing...

This paper investigates the dynamics of capital structure of Japanese firms since the early 1990s to shed light on how far the reduction of excess leverage has progressed so far in Japan. Our main findings are as follows. First, the trade-off theory provides an appropriate framework to assess...

This paper shows that combining an upper constraint on dividends, a lower constraint on dividends due to shareholder preferences, and an interest rate that increases with the debt ratio leads to a pecking-order financial structure: A typical firm will start to finance a new investment by issuing...

The October 14, 2008 TARP program mandated a forced issuance of TARP preferred stock by the largest U.S. banks. Soon after, many smaller banks were not forced but chose to issue TARP preferred stock after being approved for issuance. We investigate the impact of TARP preferred issuance upon...

The aim of this paper is to analyse for a multi-country large emerging market sample the choice between debt and equity simultaneously with the decision between short-and long-term debt. In order to investigate the joint decision among leverage and maturity we examine an unique sample of 986...

The corporate governance literature has shown that self-interested controlling owners tend to divert corporate resources for private benefits at the expense of other shareholders. Such behavior leads the controlling owners to prefer long maturity debt to short maturity debt, to avoid frequent...

Corporate capital structure decisions are key determinants of firm performance. The agency theory suggests that debt financing is one of the mechanisms to mitigate agency problems and thus to improve firm performance. This paper provides important evidence on the performance effects of capital...

Capital structure, especially in the cases of the countries that belong in the Continental Europe system of Corporate Governance has a significant impact on the way that the firm is structured, organizationally, strategically and functionally. The decision to use the capital market or debt in...

This study examines how the effect of uncertainty on capital investment varies between focused firms and conglomerate segments. One advantage of conglomeration is that it gives segments access to the conglomerate's internal capital market, making them less likely to be financially constrained....

This study examines the impact of corporate governance on capital structure decisions based on a large panel of Chinese listed firms. Using the system Generalized Method of Moments (GMM) estimator to control for unobserved heterogeneity, endogeneity and persistency in capital structure...